Monday, August 08, 2022

The “tale of two labour markets”

 City workers received double-digit wage rises while people on the lowest incomes were paid annual increases of just 1% in the last year, according to a study by CEBR (Centre for Economics and Business Research)that illustrates the ability of better-paid workers to protect themselves from the cost of living crisis.

It said workers in the banking and insurance sector had secured inflation-busting increases together with lawyers, accountants and professional services staff, mainly among those working in London’s financial district.

The economic consultancy described the figures as illustrating a “tale of two labour markets” where the “highest earners now enjoy annual pay growth of 10%, while lowest earners see just a 1% rise”.

The CEBR report and official figures indicate that the staff most able to drive up their wages are on the central bank’s doorstep in the Square Mile. According to official figures that show a breakdown of workers’ wages by industry, staff in the finance and insurance sector were paid 10.6% more than a year ago, compared with 1.4% in the arts, leisure and entertainment industry. City law firms, accountancy businesses and firms aligned to the science and pharmaceutical sectors have also paid above-average wage rises to attract and retain staff.

Nina Skero, the consultancy’s chief executive, said, the lowest 10% of workers were falling well behind the general inflation rate of 9.4% and would suffer more than other groups should the consumer prices index rise to 13%, as the Bank of England predicted in its latest forecasts.

She said: “Two prevalent yet opposing narratives have emerged. One focuses on the significant bargaining power held by employees as they take advantage of the tight labour market to negotiate record pay rises and generous bonuses. The other points to the decline in wages once inflation is taken into account, and provides abundant anecdotal evidence of people in work struggling to make ends meet.”

“Earnings growth for the highest-paid 1% took off sharply at the start of 2022,” the report said. “In the UK, a lot of the highest earners are concentrated in City of London jobs, usually in the finance, professional and technical industries. Mean pay in these industries has seen especially strong growth in 2022 with year-on-year increases in finance and insurance peaking at 19.8% in February and remaining well above 10.0% in the latest data.”

City workers get double-digit wage rises while lowest-paid see 1% increase | UK cost of living crisis | The Guardian

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